ii
FACTORS INFLUENCING MARKET ACCESS OF FRUITS BY
THE PRODUCER GROUPS (THE CASE OF MANGO MARKETING
IN MERU CENTRAL SUB - COUNTY, KENYA).
BY
JUDITH NKATHA MAITAI
A RESEARCH PROJECT REPORT SUBMITTED IN PARTIAL
FULFILLMENT FOR THE REQUIREMENT OF THE AWARD OF
MASTERS OF ARTS DEGREE IN PROJECT PLANNING AND
MANAGEMENT OF THE UNIVERSITY OF NAIROBI.
iii
DECLARATION
This research project is my original work and has not been presented to any university for the
award of a degree.
Signature ------------------------------------------------- Date ----------------------------- Judith Nkatha Maitai.
L50/60900/2011
This research project report has been submitted with our approval as University supervisors.
Signature ------------------------------------------------- Date ----------------------------- Prof. Christopher Gakuu,
School of Continuing and Distance Education,
University of Nairobi.
Signature
------------------------------------------------- Date ----------------------------- Mr. Henry Kerongo,
Lecturer,
School of Continuing and Distance Education,
University of Nairobi.
iv
DEDICATION
This research project is dedicated to my Dear Parents; James Maitai and Margaret Regeria,my
Sisters and Brother.
v
ACKNOWLEDGEMENT
I acknowledge my Supervisors; Prof. Christopher Gakuu and Mr. Henry Kerongo who
continuously directed and corrected my thoughts and write-up of this research project. This
improved my professionalism in academic write-ups and time management of daily assignments.
Great thanks to my classmates. Your valued time to have discussions with me, even over a phone
or on town streets improved my performance especially during periods when time was very
scarce. You were a source of every day motivation.
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TABLE OF CONTENTS
PAGE
DECLARATION ii DEDICATION iii AKNOWLEDGEMENT iv LIST OF TABLES viii ABBREVIATIONS AND ACRONYMS ix ABSTRACT x
CHAPTER ONE: INTRODUCTION
1.1 Background to the study………………………………………………. ……….1 1.2 Statement of the Problem……………………………………………... ……….3 1.3 Purpose of the study…………………………………………………... ……….4 1.4 Research objectives…………………………………………………… ……….4 1.5 Research questions……………………………………………………. 4 1.6 Significance of the study……………………………………………… 4 1.7 De-Limitation of the study……………………………………………. 5 1.8 Limitation of the study………………………………………………... 5 1.9 Assumption of the study……………………………………………… 5
1.10 Definition of significant terms……………………………………….. 6
CHAPTER TWO: LITERATURE REVIEW
2.1 Introduction………………………………………………………........... 7 2.2 Theoretical Framework………………………………………………... 7 2.3 Global Mango production……………………………………………... 8
2.3.1 Mango production and marketing situation in Kenya………………… 8 2.4 Group Networks in enhancing supply competitive advantage………... 9
2.4.1 The importance of external agencies in contract enforcement………... 11 2.5 Negotiation in enhancing Farmer/buyer fairness……………………… 12
2.5.1 Farmer groups and professional bodies in negotiation platforms……... 12 2.5.2 The role of the Government in negotiation process…………………… 15
2.6 Transportation,Structuring,enforcement & supervision costs………... 16 2.6.1 Reduction of logistical costs through farmer group approach………… 18
2.7 Maintaining value through post-harvest technology…………………. 19 2.8 Critical analysis and summary of literature review…………………… 21 2.9 Research Gaps………………………………………………………… 21
2.10 Conceptual framework………………………………………………… 22 CHAPTER THREE: RESEARCH METHODOLOGY
3.1 Introduction……………………………………………………………. 23
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3.2 Research Design………………………………………………………………. 23 3.3 Target population…………………………………………………………….. 23 3.4 Sampling Procedure and sample size………………………………………… 24
3.4.1 Sampling Procedure …………………………………………………............. 24 3.4.2 Sample size…………………………………………………………………... . 24
3.5 Research Instruments………………………………………………………… 25 3.6 Reliability of Research Instruments…………………………………… ……. 25 3.7 Validity of Research Instruments……………………………………............. 25 3.8 Data Collection………………………………………………………............. 25 3.9 Data Analysis method………………………………………………………... 25
CHAPTER 4: DATA ANALYSIS, PRESENTATION AND INTERPRETATION
4.1 Introduction……………………………………………………………. 28 4.2 Instrument response rate………………………………………………. 28
A Descriptive analysis 28 4.3 General information on respondents…………………………………... 28
4.3.1 Gender distribution……………………………………………………. 28 4.3.2 Number of mango trees……………………………………………….. 29 4.3.3 Variety of Mango trees……………………………………………....... 29 4.3.4 Experience in group collective Marketing…………………………… 29 4.3.5 Current engagement in collective marketing………………………….. 30 4.3.6 The Market place……………………………………………………… 30
4.4 Networking…………………………………………………………… 30 4.4.1 Collaboration with other partners……………………………………... 31 4.4.2 Classification of the partners………………………………………….. 31 4.4.3 Marketing support received from the collaborations…………………. 31
4.5 Negotiation……………………………………………………………. 32 4.5.1 Engagement in Negotiation…………………………………………… 32 4.5.2 Persons involved in negotiation……………………………………….. 32 4.5.3 Marketing Variables negotiated on……………………………………. 33 4.5.4 Types of agreements…………………………………………………... 33 4.5.5 Breach in marketing agreement……………………………………….. 33
4.6 Logistical costs in marketing………………………………………….. 34 4.6.1 Logistical cost rating………………………………………………….. 34 4.6.2 Meeting of logistical costs…………………………………………….. 35
4.7 Post-harvest handling………………………………………………….. 35 4.7.1 Post harvest technologies……………………………………………… 35 4.7.2 Reasons for lack of technology……………………………………….. 35 4.7.3 Mango loses from rejections experiences……………………………... 36 4.7.4 Reasons for Mango rejections………………………………………... 36 B Inferential Statistics 37
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4.8 Influence of Networking on mango market access………………… 37 4.9 Influence of Negotiation on collaboration on mango market access… 39
4.10 The effects of the logistical costs on mango market access………………. .…...41 4.11 Effects of post-harvest handling measure on mango market access…......... .…...43
CHAPTER 5: SUMMARY OF FINDINGS,CONCLUSIONS & RECOMMENDATIONS
5.1 Introduction……………………………………………………………………....... 45 5.2 Summary of Findings…………………………………………………………........ 45 5.3 Discussions……………………………………………………………………........ 47
5.3.1 Influence of networking by producer groups on the mango market access... 47 5.3.2 Influence of negotiation by producer groups on the mango market access... 47 5.3.3 Effects of logistical cost by producer groups on mango market access …... 48 5.3.4 Post-harvest handling measures by groups and its effect on mango market.. 48 5.4 Conclusion…………………………………………………………………………. 49 5.5 Recommendations………………………………………………………………. 49 5.6 Suggestions for further research………………………………………………... 49
REFERENCES…………………………………………………………………. 50
APPENDICES
Appendix 1: Letter of transmittal…………………………………………….. 56 Appendix 2: Group and individual farmer questioner……………………….. 57 Appendix 3: Stakeholders questioner………………………………………… 60 Appendix 4: Time schedule and Budget……………………………………... 62 Appendix 5: Code of conduct for fresh horticultural produce sales –HCDA... 63
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LIST OF TABLES
3.1 Sample size……………………………………………………………………. 24 3.2 Operationalization definition of variable table……………………………….. 26 4.1 Gender distribution…………………………………………………………… 28 4.2 No. of Mango trees………………………………………………………….. 29 4.3 Variety of Mango trees……………………………………………………….. 29 4.4 Experience in collective Marketing ………………………………………….. 30 4.5 Current engagement in collective marketing…………………………………. 30 4.6 Market place…………………………………………………………………... 30 4.7 Collaboration with other partners……………………………………………... 31 4.8 Category of partners…………………………………………………………... 31 4.9 Mango marketing support…………………………………………………….. 31
4.10 Engagement in Negotiation…………………………………………………... 32 4.11 Persons involved in negotiation………………………………………………. 32 4.12 Variables negotiated on……………………………………………………….. 33 4.13 Types of agreements…………………………………………………………... 33 4.14 Breach in marketing agreement……………………………………………….. 34 4.15 Logistical cost rating………………………………………………………….. 34 4.16 Meeting of logistical costs…………………………………………………….. 35 4.17 Post harvest technologies……………………………………………………... 35 4.18 Reasons for lack of technology……………………………………………….. 35 4.19 Mango rejections experiences………………………………………………… 36 4.20 Reasons for rejections………………………………………………………… 36 4.21 Influence of collaboration on collective marketing…………………………… 37 4.22 Influence of collaboration on current engagement in collective marketing…... 38 4.23 Influence on Negotiation on Market access…………………………………... 39 4.24 Influence of nature of agreement on Market access…………………………... 40 4.25 Influence of logistical costs on collective Marketing……………………….. 41 4.26 Influence of logistical cost Market access…………………………………… 42 4.27 Influence of post harvest handling technologies on Market access………….. 43 4.28 Effect of post harvest handling technologies on market agreement…………. 44
x
ABBREVIATIONS AND ACRONYMS
AFC - Agricultural and Food Council
CF - Contract Farming
FAO - Food and Agricultural Organization
FO - Farmer Organization
FPEAK - Fresh Produce Exporters’ Association of Kenya
GAP - Good Agricultural Practices
GTZ - German and international development cooperation
HCDA - Horticultural Crop Development Authority
KARI - Kenya Agricultural Research Institute
KEMPMA - Kenya Mango Production and Marketing Association
KHDP - Kenya Horticulture development Project
MOA - Ministry of Agriculture
MVC - Mango value chain
POs - Producer Organizations
PSDA - Private Sector Development in Agriculture
SCM - Supply Chain Management
SPSS - Statistical Package for Social Sciences
USAID - United States Agency for International DEvelopment
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ABSTRACT
Changes in agriculture are taking place in terms of the fundamental business proposition and the
ways of doing business, example, a shift from spot markets to collective and contracts marketing
models. This is due to the need for a all year-round supply and global change in consumer
preferences e.g. quality, safety, health and nutritional aspects of food products. Interest in quality
management systems, food safety and competition in markets is rising, associated with profitable
agricultural products trade (Agribusiness). This is the reason why in 2004, the Kenya government
developed and launched the Strategy for Revitalizing Agriculture (SRA), Which sets out the
Government’s vision: To transform Kenya’s agriculture into a profitable, commercially oriented,
internationally and regionally competitive economic activity that provides high quality and
gainful employment to Kenyans.
This research study on factors influencing market access of fruits, specifically on mango by the
producer groups was conducted in Meru Central sub-county. The objectives of the research was to
get how producer groups networking, negotiation, logistics costs and post-harvest handling
measures affected their mango market access. Background to the study, problem statement,
purpose, limitations and delimitations to the study were indicated. Literatures review based on
the four objectives was discussed. 12 mango groups were purposively selected, 120 farmers
respondents randomly selected and 5 stakeholders purposively selected in the study. Documentary
analysis and questioner data collection instruments were used. Data was analyzed using Statistical
Package of Social Scientists (SPSS) and presented both qualitatively and quantitative using
descriptive method and SPSS tables respectively. Relationships between dependent and
independent variables was done using cross tabulations. There were four major finding and
conclusions from the research. Networking with market linkaging stakeholders was minimal
compared to technical advises and information.A large percentage of the farmers had mutual
agreement, while farmers had no organized plan to meet the transportation costs which was rated
highest in market logistics. Access to high value market was possible to farmers who owned a
cooler, while the rest sold mango at local or farm- gate markets. Further research to establish
whether technical expertise on mangoes had led to improved mango quality and quantities was
recommended.
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CHAPTER ONE
INTRODUCTION
1.1 Background to the study
Trade in fresh horticultural products has become increasingly global driven by liberalization of
domestic and international markets, climatic changes, need for all year round supplies, changes in
consumer preference and technical changes in processing of high value products such as fruits
juices (WTO, 2000). This trend has been encouraged by a liberalizing international and national
regulatory framework associated with World Trade Organization (WTO), International Monetary
Fund (IMF) and the World Bank policies. There have also been developed standards which
incorporate the concept of globally accepted Good Agricultural Practices (GAP) within the
framework of commercial agricultural production example; EurepeGAP governs European
countries trade with other counties. This expansion has the potential to benefit smallholder
farmers through linkages to other parts of the economy (Griesbach, 2003; FAO). The transition
embraces the whole food chain from production and processing to consumer choices and the
marketing systems
The EU and its individual markets are progressively introducing conditions and regulations to the
non-EU suppliers which have made market access more difficult and resulted in new costs being
imposed on the suppliers. These measures cover areas such as traceability, quarantine issues,
packaging, human well fare and safety. There is a new emphasis on taste and aesthetics thus
demand for healthy, ethically produced high quality food, presented as a convenient product, with
customers willing to pay for the value added products. Consumers now demand that farmers and
retailers are accountable for food safety and are prepared to pay for this assurance (USAID,
2001).This causes an effect to transaction costs and post-harvest handling measures on farmers to
access market for their produce.
According to FAO, (2003), fruits and vegetables commercialization from the developing
countries in Africa is also a growing sector. The major developing African producers like Kenya,
Egypt, Zimbabwe, Gambia, Ivory Coast and Zambia have benefited from the international trade.
However, in Africa, individual rural farmers often produce small quantities of produce.
Production is seasonal and markets are distantly separated in space. Costs associated with
2
transfer and transport of commodities is high. Exchange functions of agricultural products often
involve participation of middlemen in the marketing chain with intricate information networks
further weakening the producers’ bargaining position. This has led to formation of food supply
chains. There is a large opportunity for well organized, business thinking, entrepreneurial farmer
groups to bridge the gap between production and marketing (FAO, 2010). It is envisaged that
collective marketing facilitates economy of size which help to reduce the logistical costs of
getting the produce to the market and improve the bargaining power of producers. Marketing can
be organized informally (small groups of farmer) thus permitting the collective commercialization
of products (OECD, 2007).
To meet the Millennium development goal (eradicate extreme poverty and hunger) , the policy
document “vision 2030” emphasizes the need to have highly productive, commercially oriented
and competitive agricultural enterprises GOK (2007).This will be accomplished through
increasing productivity and improving market access for smallholder through better supply chains
management e.g. For Kenya, contract marketing practice has gained new momentum with
various companies scrambling to source produce from small holder farmers. Example, Coco-Cola
through sunny processors working with mango farmer groups to support its Minute maid fruit
juice brand, in partnership with technoserve to contract and capacity build small- holder farmers
to enable them service the large market opportunities that it offers (Sunny Processors, 2010).
Japan, Singapore, and Hong Kong are important fruit markets. Among the fruits, mango has been
the third most important fruit in terms of area and total production after bananas and pineapples
respectively (Griesbach, 2003). The capacity of Kenyan farmers to be competitive and access
markets depends mainly on their ability to sustain a reliable supply of fruits that meet increasingly
stringent quality and safety standards. However, mango quality is constrained due to mango fruit
flies, the mango weevil, mango rust, maturity of the fruit and the variety, and may disqualify them
from market (USAID/KHDP, 2010).
The focus of this research was to find out the factors influencing mangoes market access by the
producer groups in Meru central sub county.
3
1.2 Statement of the Problem
Smallholder fruit farmers face challenges in marketing because of the changing preferences of
consumers in developed (and increasingly in developing) countries for safer, healthier, better
quality food that has been produced in environmentally sustainable and ethical ways. The most
threatened are the perishable fresh food family (fruits and vegetables) as they are more liable to
accelerated physiological, chemical and microbial processes that lead to the deterioration and loss
of wholesomeness (FAO, 2001). The process of industrialization has created opportunities for
smallholders in developing countries to produce horticultural commodities under contract,
according to certain specifications (Kandiwa, 2011), but has the danger that small farmers will be
marginalized and excluded from high-value markets (Reardon & Barrett, 2000). The question
remains whether an arrangement such as group approach and collective marketing provides the
solution to this challenge.
In a study on perceived mango quality in the Netherlands – for the World Agroforestry Centre,
it was found out that there were chances for farmers in Dutch market. Fruit juice was among the
most imported products in the Netherlands (FAO, 2005). Dutch consumers indicated it was very
important that people who produced mangoes did this under proper working conditions.
The Program for Promotion of Private Sector Development in Agriculture, Kenya (PSDA, 2007)
reported its intervention to develop the mango fruit value chain in Meru central started through
capacity building in 2004.However to–date, there is inadequate institutional interventions for
market development, lack of quality and food safety management framework and limited
partnerships between private/public sectors towards value addition technologies. The PSDA
further reported its support to formation of the Kenya mango producers and marketing
Association (KEMPMA) for market access, lobbying and advocacy. Its grassroots strength and
intervention to mango farmer market access was unclear.
Further, a mini baseline mango volume study conducted in Meru central by USAID/KHDP,
2009, found out that at harvest time, there was often an oversupply which lead to low prices and
product losses. The price of mango went as low as 2 shillings a piece. Buying agents were getting
a better share in the mango trade. There remained little evidence whether farmer groups were
platforms for bargaining in their economical engagements.
It was against this background that the researcher based the study to understand networking,
4
negotiations with buyers, logistical costs and post-harvest handling measures which could control
the mango market access by producer groups at Meru central sub-county.
1.3. Purpose of the study
The purpose of this study was to find out factors influencing of mango market access by the
producer groups in Meru central sub-county.
1.4. Research objectives of the study
The study was guided by the following research objectives:
i. To establish the influence of networking by producer groups on the mango market access
in meru central sub-county
ii. To determine the influence of negotiation by producer groups on the mango market
access in meru central sub-county
iii. To investigate the effects of logistical cost by producer groups on mango market access
in meru central sub-county .
iv. To find out the post-harvest handling measures by producer groups and its effect on
mango market access in meru central sub-county
1.5. Research questions
The study was guided by the following research questions:
i. What is the influence of networking by producer groups on the mango market access?
ii. How does the producer groups’ negotiation influence the mango market access?
iii. What are the effects of logistical costs by producer groups on the mango market access?
iv. How do the post-harvest handling measures by producer groups affect the mango market
access?
1.6. Significance of the study
This research was to find out factors influencing mango producer groups and their market access.
The study enabled mango farmers conduct their self assessment and have better understanding of
their level of engagement and measures for success in market access. The findings and
recommendations further will help mango farmer groups, their associations, buying firms,
5
government agents, non-governmental organizations and other researchers identify areas of
intervention in development of mango supply chain.
1.7 De –limitations of the study
The research was confined to Meru central sub- county at mwanganthia and kiagu wards with a
population of 24,793 and 22,243 persons respectively according to Kenya population and housing
census (2009). The focus was on mango producer groups namely Kaguma, mbajone, nduruma,
njuthine, nkumbo, bamato, runywene, kamuga, makandune, kathwene, gakuuru and kiamuri
which have been registered by ministry of social services (MOA, 2012).Interviewing was done
during groups’ meetings.
1.8. Limitations of the study.
Some challenges experienced were that individual group members were selected randomly hence
could interpret the questions wrongly due to high illiteracy levels. To overcome this, data
collection was conducted during the farmer group meetings with guidance by research assistants
and reference was made from group records.
1.9 Assumptions of the study
Various assumptions were made while carrying out this study i.e. the respondents would answer
the questions asked correctly and truthfully and would recall all the basic information important
for the study.
1.10 Definition of significant terms as used in the study:
Contract marketing -An agreement between farmers and processing and/or buyer firms for the
production and supply of agricultural products under agreements, frequently at predetermined
prices, quality and quantity.
Influencing - Manipulating, controlling, actions
Logistical costs -The expenses incurred during marketing of mango fruit (Transportation,
grading & supervision costs)
6
Market access – Ability of farmer groups to create demand for, supply and sell their mangoes to
consumers/agents at the required quantity and quality, within the required time, at consumers’ or
buyers’ convenient destination and at profitable price.
Negotiation –Bargaining process by farmer groups e.g. with the mango buyers and transporters
towards making agreement of the marketing and ensuring fair terms and balanced powers. i.e on
payment schedule, pricing, collection days and produce quality and quantity to be delivered
terms.
Networking - Creating relationships, linkages and collaboration with other external actors by
farmer groups. example; associations, federations, government agents or banks who have ability
to offer a group other benefits example credit, technical expertise or inputs.
Post-harvest handling- Managing and maintaining the mango quality, appearance, nutrition,
(wholesomeness) to meet consumer’s tastes and preferences. It also involves avoiding
microbiological contamination
Producer group- Enterprise oriented, voluntarily owned and controlled by the member farmers.
It is established and managed in order to meet the mutual needs of its owner members. They can
be either input supply groups, service groups or marketing groups
Supply chain management (SCM) - Focus on inter-firm process both at the input and the output
side of the firm, and emphasize the link between the production and marketing.
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CHAPTER TWO
LITERATURE REVIEW
2.1 Introduction
This chapter shows literature related to market access through group approach as documented by
others who have researched and or written on this subject. This chapter is organized in the
following subtopics; Groups Networks, Negotiations, logistical costs and Post- harvest handling.
The chapter also covers the critical aspect of the existing literature.
2.2 Theoretical Framework
This research will be based on Supply chain management theories founded by John Von
Neumann 1928 which draws on several disciplines i.e. Transaction-cost economics, Power and
power relationships, Agency and negotiation theories.
Transaction-cost economics analyses the costs associated with the exchange of goods and
services (Hobbs 2003). example costs of acquiring information, costs associated with negotiating
and enforcing contracts, definitions of property rights, and the monitoring and changing of
institutional arrangements which define the processes by which business transactions occur
between companies. Agency theory involves defining the most appropriate forms of contract to
protect the relationships between chain members (Eisenhardt 2004). The aim is to produce an
agreement which achieves a balance between chain members. The agency theory approach is
complementary to transaction-cost economics; together they focus on improving the economic
efficiency of doing business between firms.
Power and power relationships between businesses within a supply chain, and between the chain
members and the government, have been studied by political scientists (French and Raven 2009).
Boehlje (1998) argue that the power of one business over another is dependent on the economic
structure of the relationships. Power is related to dependency, and dependency is related to the
availability of alternatives. The more alternatives a farmer group has, the less dependent it will be
and the smaller the chance that it will be unduly affected by the power (real or perceived) of
another firm-buyer. Negotiating Power and Performance Incentives help explain the choice and
implementation of various vertical relations within agricultural supply chains systems. In
negotiated coordination among stages in the food chain, the invisible hand of the market is
replaced by the very visible hands of buyers and sellers negotiating the terms of trade. In such a
8
system, phenomena such as negotiating strategy, skill, power, conflict resolution, trust,
performance monitoring, and evaluation become central in the system.
A key concept in this argument is that of trust in the economic transaction, In a continuing game
even the large contractor who is recognized as being in control must maintain a reputation for
fairness. The contractor needs a group of contractees as much as the contractures need the
contractor.
Supply chain management theory further builds on strategic management theory which
emphasizes on importance for creating farmer competitive advantage through innovations and
strategic management to create value of their produce. It also builds on the capability theory
which emphasizes on need for symmetrical knowledge between parties involved in contracts to
enable them make choices on organizational structure in food system. The need for cooperative
approach and incorporation of government support is supported. The consolidation of
agribusiness firms over the last two decades has much to do with attempting to gain real or
perceived market power. At the upstream end, the small and fragmented businesses of
smallholders have very little individual power, which may provide them with a strong incentive to
work together. All the six theories seeks to represent whether the game is worth for a player?
Supply chains management theory is vital basis for foods and their market access.
2.3 Global mango production and trade
Mango is one of the most important fruit crops in the tropical and subtropical lowlands. It is
native to India, Bangladesh and Malaysia. It can be found growing in more than sixty other
countries throughout the world. International production and trade for mango has increased since
the 1990s due to availability of longer longer shelf life mangos varieties .The largest producer is
India while Mexico is the largest mango exporter in the world, followed by Brazil. USA is the
largest importer then follows the European Union (FAO, 2003).
2.3.1 The mango production and marketing situation in Kenya
Mango farming has spread to most parts of the country since its introduction in 14th century, to
areas e.g Eastern (54% of the production), Coast (22%), Nyanza (4.5%), and Central (3.5%),
with the rest coming from other parts of the country (Griesbach, 2003; FAO). In eastern,the
higher percentage of improved mango varieties are grown in Mbeere , Meru Central, Makueni,
Machakos and Meru South districts. The improved varieties (Apple, Keit, Tommy, Van-Dyke),
which are grown for both local and export markets, are usually grafted on local mango varieties ie
9
Ngowe, Dodo and Boribo (Griesbach, 2003). Brokers collect mangoes from individual producer
farmers or groups and then supply to the main open markets, the export market, and institutions
(FAO,2010). Once consignments are delivered to the markets, wholesalers buy and sell to
retailers who then sell to consumers in kiosks, other retail markets, green groceries and roadside
markets. Processors often acquire the bulk of mangoes directly through brokers and at a small
scale from the producers. The traditional air system continues to handle most of fresh mango
produce and is frequented by the huge numbers of Medium- and low-income households (PSDA,
2008).At the high end of the market, the supermarkets sell high quality mangoes to the upper
income consumers. This outlet, however, only accounts for less than 5% of the mangoes
distributed in Kenya. (FAO, 2010).
In Kenya, contract marketing practice has gained new momentum with various companies
scrambling to source produce from small holder farmers e.g Coco-Cola through sunny processors
is contracting mango farmers to support its Minute Maid fruit juice brand. in (Sunny Processors,
2010). However Mango quality is a key constraint due to mango fruit flies, the mango weevil,
mango rust, maturity of the fruit and the variety, which all affect the fruits, and may disqualify
them for exports (KHCP,2010).
2.4 Farmer Group Networks role in enhancing supply competitive advantage
The traditional economic view is that a firm’s competitiveness is determined by how efficiently
and effectively its management is able to organize the firm’s internal Processes, structure,
resources and people so as to maximize profit. This allows firms to compete against each other
and share a particular market segment (Porter,2000).However, over the last 20 years this
traditional view of how firms become and remain competitive has been challenged by alternative
view that sees a firm as part of a chain that links the production of goods with consumers. Firms’
competitiveness is influenced by how it networks with others in the supply chain (Gifford, 2001).
Van Roekel (2002) further points out that it is becoming increasingly evident that achievement of
desired market position cannot be achieve sorely. A firm has to network and cooperate. This
business model called supply chain management (SCM), is built on the preposition that there are
gains from cooperation and coordination between firms in a supply chain, that are not available to
firms operating independently of each other.(O’Keeffe,2008). This modern model has been used
also in Agri-food industries, including horticulture (Fearne and Hughes, 1999).overtime the SCM
10
ensured the logistical and distributional efficiency of flow of materials along a supply chain
(Cooper and Ellram, 2000).However overtime, the focus of SCM is not to achieve logistical
efficiency alone, but also for competitive reality, relationships, interfirm coordination and
satisfying the end consumer (world bank, 2007).
Integration of business systems and processes between firms is necessary to achieve operational
efficiency and improve flow and transparency of information (Beers,1998).Effective relationships
drive successful SCM, because they are the antecedents of information exchange, conflict
resolution and co-innovation between supply chain partners (Morgan and
Hunt,1994).Performance of the whole system (linking input suppliers-producers-consumers)
wholly depends on interactions among all partners (Jackson,2003). The Agriculture and Food
Council of Alberta [AFC],2002) highlights that Interaction with Market place provides
information to decision makers for every link in the chain. Although contract farming involves a
written agreement between farmers and the agribusiness firm or integrator, these contracts are
seldom legally enforceable in practice (O’Keeffe, 2008). The poorly developed legal institutions
in developing countries contribute to high transaction costs in suing individual smallholders for
contract breach. Enforcing a contract also leads to souring the relationship between the farmers
and the firm, as well as between the agribusiness and the community.
According to Coulter (1999), Farmers sometimes break contract either on account of production
failure or because they have sold the produce to competing buyers or to the local spot market.
When there is a good market at harvest, many farmers are lured by higher spot prices where they
can sell their produce for cash. In this way they avoid the repayment of credit, which is usually
subtracted at the time of delivery. The farmer often claims production failure for the lack of
compliance with the contract. Kherallah (2010) also notes that the absence of effective legal
systems and lack of collateral held by smallholders, as well as the weak insurance markets, create
considerable risk for companies engaging in contract farming with smallholders Because of the
risk of default, many agribusinesses or traders have discontinued the process of supplying inputs
to farmers again creating barriers preventing entry to agricultural markets by some
smallholders.How does one resolve the problem of farmer default? Agribusiness has developed a
number of innovative mechanisms to deal with this problem, mainly in the case of high-value
crops. Coulter et al. (1999) has discussed some mechanisms. Lending through groups, Good
communication and close monitoring to foster good company-farmer relations and a sense of
11
trust, which can contribute to minimizing strategic default. The writer adds also that Range and
quality of services offered, enhance closer relationship between the farmer and business and the
farmer stands to lose by breaking the relationship.
2.4.1 The importance of external agencies in the case of contract marketing.
Contracts are categorized between formal (or written) and informal (or verbal). In agriculture,
contracts are often simple and verbal (Bogetoft and Olesen, 2004). There are good reasons why
most contracts are informal. Often, the agreement contains variables that cannot easily be verified
by the court in case of contract breach. While contract partners know whether the agreement has
been honored or not, for instance whether the right quality has been delivered, it may be difficult
for outsiders to assess whether the actual quality is equal to the one described in the contract. An
even more mundane explanation for the simplicity of agricultural contracts is that simplicity is
efficient. Even if parties are able to write complete contracts, it may be less costly to engage in
simple informal contracting and rely on self-enforcement instead of third party protection.
Moreover, in many developing countries, notably in Sub-Saharan Africa, there is no tradition of
written contract. The traditionally used informal agreements and understandings are still
commonly used and respected (O’Keeffe, 2008).
Informal contracts that cannot be enforced by legal authorities (or other third parties) are called
self-enforcing contracts, which means that parties have incentives to honor the contract in all
contingencies. These incentives can be both economic and social (Nooteboom, 2002). Economic
incentives to comply with the contract can be derived from the contractual relationship itself or
from the larger network of current and potential contracting partners. Relationship-specific
incentives to honour the contract result from (mutual) dependency or from the unique partner
value. This is a micro-based, or bilateral, incentive. Contracting parties may also have a macro-
based (or multilateral) incentive to honors the contract. The so-called reputation mechanism
(Eaton & Shepherd, 2001) means that parties have a calculative interest in cooperation in the
current contract because they expect payoffs from future cooperative behavior.This self-
enforcement mechanism of agricultural contracts has been found both in developed countries and
developing countries (Key and Runsten, 1999).
Warning and Key (2002), writing about contracts in peanut production in Senegal, found that
most contract enforcement actually occurs through a repeated-game approach. In the absence of
12
public mechanisms for contract enforcement, private enforcement mechanisms can be of help.
The organization for economic cooperation and development [OECD], (2007) also argues that the
use of internal private mechanisms for contract enforcement through contractual arrangements
between two parties in an exchange can make contracts ‘self-enforcing’. In other parts of the
developing world, one finds that legal institutions do not play an important role in the
enforcement of contracts. An analysis by Morgan (2009) suggests that trust-based relationships
are the dominant contract enforcement mechanism under these circumstances. Trust is established
primarily through the repeated transactions of the contracted parties. Trust and social networks are
usually the mechanisms by which transactions and contractual arrangements in developing
countries are enforced and thus provide another alternative to be considered in reducing contract
default.
Networking assures government support,infrastructure,banking facilities (Datta,2006).In some
situations it is not easy to build immediate partnerships. Therefore there can be a quasi-judicial
system at local level (district administration) to monitor the contract and resolve any conflict with
appropriate penalties to any of the defaulting parties. `.Partnership with governments and its
agencies can help in building relations with the producers.Thus, it is important for Farmer groups
to tread carefully when partnering with outside agencies, and the method of engagement between
farmer groups and external agencies is critical. Kindness and Gordon (2001) suggest that the role
of outside agencies should be a facilitative one, not an interventionist one. Partnerships should
provide intensive “software” support, in which external actors accompany and advise farmer
organizations (FOs) but do not intervene directly in decision-making. Such collaborations can
also help existing organizations become more empowered and more capable of representing the
interests of their members in key policy areas. Cooperation at the operational level, and Farmer
groups should have clear and enforceable rules separating political interests and external pressures
from its leadership. (Thompson, 2009).
2.5. Negotiation in enhancing farmer/buyer fairness
Experience across a range of partnerships suggest that shared decision making, based on
differentiated but comparative sets of power and responsibilities for each partner will increase not
only equity but also efficiency (Mayers and Vermeulen, 2002).Dealing with a more equal partner
reduces conflict and allows access to acknowledged systems. According to Ashman (2001), a
13
survey conducted on civil society organizations and industry concluded that power sharing was
critical not only for equity but for the resilience of partnership. Alliances ranging from small-scale
growers and seller groups to national-level federations and trade unions, are fundamental not only
to lowering operating costs but also to enhance the bargaining power of community partners in
deals with large companies. Fortunately there is little evidence that farmer’ groups in contract
farming have become platforms for collective action, either to negotiate with companies or
organize around their issues (Baumann, 2000).The best progress has been made in countries that
already have strong traditions of political and labor organizations, such as Canada and Mexico
(Braun, 2003).Another good basis for bargaining power is effective control of resources of
importance to the company pertinent. Example comes from indonesia, where the tourism
association in Kuningan used this power to negotiate a management deal with the company
Perhutani, resulting to a win-win outcome in which revenues increased for both sides (
Mudimigh, 2004).
The concern with unfair conduct by contracting firms is justified by empirical evidence that
imbalanced power in contractual relations can lead to noncompetitive behavior by the dominant
party. In the case of contracting agribusiness firms, this can be expressed, by the imposition of
low prices, deductions of highly set input costs, early termination of contracts, the manipulation
of quality attributes or by the design of biased contractual clauses (Roth and Singh, 2004).
Whereas farmers’ group action does not impede such practices, it does reduce the scope for their
imposition. Besides with their strengthened power for financial negotiations, associations are
better positioned to find support from government, NGO’s or private advisors in order to monitor
compliance with contractual clauses, double check product quality measurements, mediate
litigations and provide information on prices and costs (Guo et al.,2005).
2.5.1 Farmer groups and Inter-Professional bodies in negotiation platforms
Successful partnerships can go on to use their cooperative as a foundation for bargaining with
third parties. Example, the pulp and paper companies in Sappi and Mondi in South Africa used
their out-grower schemes to lobby government for more rural roads (Cairns, 2000) In the
USA,japan and Europe farmers’ associations have successfully used tactics such as petitions to
governments and development of alternative markets to improve their own policy influence
(Welsh 1997). Third parties in company-group or community partnerships also face considerable
uncertainties. According to Ashman (2001) civil society organizations play important roles as
14
representatives, managers or mediators in situations where small farmers also face challenges
because of the changing preference. A second important issue is the lack of power and of
negotiation capacity of most small scale farmers in their relationship with down-stream agents.
According to Phillips (2007), Negotiation skills, power and political representation are also
critical for small farmers to participate in the improvement of their institutional environment and
the setting up of a realistic regulatory framework. Without a strong environment, producers and
producer’ organizations alone may lack the capacity to anticipate market trends and changes.
Example; The aquaculture sector In Indonesia, as with other parts of. the global food industry, has
experienced increased market concentration, meaning that there is an increasingly smaller number
of companies operating at any particular stage of the market chain, enabling them to influence
prices and giving them considerable market power, weakening the position of farmers (Penrose-
Buckley, 2007). Thus, it is no longer enough for aquaculture farmers to focus solely on increasing
production efficiency, but also on marketing and integrating successfully into the production
chain, producing high-quality and safe products, accessing the required production inputs at
affordable costs, and engaging in on-farm management practices that are highly efficient and
sustainable, taking account of the surrounding environment and social issues related to production
(Penrose-Buckley et al., 2007).
The development of producers’ organizations (POs) enables the pooling of different resources
such as credit, information, labour force, transportation means for selling products or buying
inputs and thus, it usually leads to economies of scale. These organizations can assume several
functions in the commodity chain, such as collection, grading, postharvest handling and storage.
They include large organizations, such as farmer associations, cooperatives (USAID,
2004).through bulk purchase or selling, they increase individual farmers’ bargaining power.
POs can play a role in negotiating with other stakeholders changes in institutional environment
according to small farmers’ interest. Menard,(2000) argues that POs are a good candidate for
solving coordination problems since they build up internal and external relationships of trust that
are required to secure credible commitment forms and to cooperate in order to realize mutually
beneficial actions and investments. State deficiencies are usually high in less developed countries,
e.g. difficulties in organizing internal negotiations with stakeholders and pressure of foreign aid
(Felix, 2003).However negotiation process between the state and POs are really important in
15
creating a more enabling institutional environment for farmers’ access to market. These
negotiations can lead to state decisions which foster producers’ competitiveness.
According to Gitz (1998), Inter-Professional bodies also operate in supply chain. They group
various stakeholders involved in different functions (producers, traders, exporters) with aim to
resolving in a concerted way the constrains that hinder the competitiveness of a subsector,
creating more value. On a bilateral level, repeated interaction can lead to empathy, identification,
routinization, and affection. Empathy entails that one knows and understands how partners think
and feel. It allows one to assess strengths and weaknesses in competence and intentions, to
determine limits of trustworthiness under different conditions (Nooteboom, 2002). Identification
entails that partners have shared understanding about the goals of the contractual relationship and
even develop shared norms to be applied in the relationship (Akerlof and Kranton, 2005). On a
multilateral level, contracting parties refrain from opportunistic behavior because the prevailing
values, norms, customs, and moral obligations in the community induce behavior of compliance
(Keefer and Knack, 2005).
2.5.2 The role of the government in market regulation.
Governments may play two important roles in ameliorating the negative effects of CF (Eaton and
Shepherd, 2001). Through acting to regulate the market ensuring that contractors do not abuse
their market power. Examples of such role of the state are the Enactment of competition policies,
the introduction of special contract law, and the provision of low cost arbitration options. Second,
the state may facilitate contracting by encouraging Agribusiness firms to initiate new contracts
and providing support to smallholders to make them suitable for contract selection. Such
facilitating activities may include the provision of training (for instance in negotiation), extension
services providing information on pros and cons, and research on CF practices and their impact.
But also providing more information on markets and prices may greatly support the position of
smallholders when entering CF schemes.
2.6 Transportation, structuring, administration, enforcement and supervision costs
A principal disadvantage frequently associated with fruit collective marketing in developing
countries is the high level of logistical costs. These costs are often excessive in projects involving
large numbers of small farmers who are spatially dispersed (Key & Runsten, 1999).Excessive
logistical costs are generated as a result of the structuring, administering and enforcement.
16
Moreover, the integrator incurs additional supervision and monitoring costs in conjunction with
the non-cost-effective delivery of services and inputs to farms that are small and spatially
dispersed. Smallholders are often also dispersed and difficult to reach, which adds to the costs of
service delivery and monitoring. They also require more inputs and capital for the farm per unit of
production, as well as specialized machinery and much more extension assistance (Key &
Runsten, 1999).
Food production has also become an industrialized, capital-intensive business that operates in a
highly competitive and unpredictable global market, is relatively inelastic and is faced with
increased supply by competing countries (FAO, 2000).The result of these forces is that the
industry has evolved to optimize efficiency and minimize related costs. This has resulted in fewer
larger farms, and specialization (Frank & Henderson, 2008).
The process of industrialization has created opportunities for smallholders in developing countries
to produce horticultural commodities under contract according to certain specifics (Kandiwa,
1999), but has the danger that small farmers will be marginalized and excluded from high-value
markets (Reardon & Barrett, 2000). The challenge is therefore to prevent this from happening and
to find ways to link small growers in developing countries to these high-value markets. The
question remains whether an arrangement such as collective farming provides the solution to this
challenge. However, contracts, modified to suit country-specific Conditions can be used as a
vehicle to overcome transaction cost barriers, technology, competition, low prices, the inelasticity
of demand and the inherent instability of agriculture, as suggested by Bonnen & Schweikhardt
(2004). The danger exists that the intrinsic monopolistic nature of large agribusiness (often
multinationals) could result in the total marginalization of many farming communities if the
introduction of this ‘new agriculture’ and relationships in developing areas are not well managed.
Owing to weak legal institutions not guaranteeing contract enforcement in many countries,
chances of opportunistic behavior of growers do exist, providing an important risk element to the
contracting firm. However, Key & Runsten (1999) stress that agribusiness firms are often in a
much better position to provide production loans to growers owing to the limited alternative
markets and low monitoring, enforcement and other transaction costs. Guo (2005) suggests that
one option to eliminate the problems discussed is for agribusiness firms to opt for vertical
integration whereby all stages of the marketing chain – from production to consumption – take
17
place within one firm. However, due to typical problems in the labour market (shrinking,
supervision costs, etc.), vertical integration is seen as inferior to the contracting option. In
commodities where labour input is fairly high, the plantation or vertical integrated models will
clearly provide diseconomies of scale and inefficient outcomes, thus opening the way for small-
scale family farms. This is confirmed by the analysis of Delgado (1999), who applied a similar
review of the specific factors in rural Africa most likely to be associated with transaction costs,
and the way in which they shape the type of producer organization most suited to dealing with
them. His analysis provides an added dimension of the commodity characteristics to the
theoretical explanation for the existence of contract farming and other forms of vertical
integration. It is important to recognize that individual commodities have both production and
marketing characteristics that will determine the most optimal form of production organization for
that specific commodity (Hobbs & Young, 2002). As shown earlier, high labour intensity favors
smallholder organization, whereas both economies of scale and heavy investment requirements in
production produce the opposite effect. Delgado (1999) argues that most commodity-specific
transaction costs arise in marketing and processing. Contract farming reduces the need for labour
supervision while increasing the access of producers to needed inputs and skills. High
perishability also tends to discourage independent small-scale operators, because of the high risks
involved in not having an assured processor market.
The transaction cost approach has been used to explain transactions on the global commodity
chains (Gereffi,2005). These studies acknowledge that, in addition to market-based relationships
and hierarchies (vertically-integrated firms), there exist a set of hybrid forms encompassing the
spectrum of explicit coordination. Vertical coordination via contracts is one of these hybrid forms.
The rationale applies to agro-food market as well (Frank and Henderson,2008). Neo-institutional
economists seek to understand market and non-market exchange under positive transaction costs.
The emergence and structure of contracts are explained in terms of information incompleteness,
moral hazard, and missing markets (Menard,2000). In other words, when the characteristics that
the buyer is concerned about are difficult to obtain through market exchange, vertical contracts
and/or vertical integration will emerge. From the viewpoint of a specific agricultural sector,
Martinez (2002) found that the emergence of new, specialized large-scale production technology
affected the transaction complexity of marketing exchange in the poultry, egg, and pork
industries. Vertical contracts provided an efficient means of organizing markets by reducing the
18
transaction costs. Non-standard products that originate from food safety and environmental
concerns lead to the substitution of vertical contracts for arm’s-length market exchange (Humpret
and Memedovic, 2006).The new institutional economists conclude that the transformation of the
agro-food market increases the transaction costs associated with market exchange (holdup,
coordination, and volatility), but can reduce some of these costs by entering into a contractual
arrangement, although contracting will encounter other types of costs, namely ex ante contracting
costs (when drafting, negotiating, and safeguarding agreements), and ex post costs (when
enforcing the contracts).Peterson, (2001),conclude that family farming is the most efficient
institutional arrangement in the agrarian economy.
2.6.1 Reduction of logistical costs through farmer group approach
Another approach suggested by Coulter et al. (1999) to counter the problem of high transaction
costs of dealing with smallholders is to consider the promotion of farmer groups or farmer-
controlled enterprises (commonly also referred to as cooperatives) in conjunction with a contract-
farming venture. The cooperative could bargain and negotiate prices and the terms of the contract
on behalf of the farmers. It can also be instrumental in providing information, inputs, technical
and quality assistance to the growers. Owing to the poor record of agricultural cooperatives in
developing countries, it is important that such cooperatives be established on sound principles that
will ensure their sustainability. The recent work by Cook & Chaddad (2000) provides an
indication of the aspects that should be taken into account to ensure that cooperatives (or ‘new
generation cooperatives’, as these authors call them) provide the necessary benefits to producers
in any contractual or marketing arrangement.
Both Kherallah (2000) and Coulter et al. (1999) use the activities of the Fresh Produce Exporters’
Association of Kenya (FPEAK) as an example to illustrate the value of grass-roots activity in
promoting linkages of smallholders with agribusiness(exporters). FPEAK supports small farmer
groups through technical assistance and training, small grants to invest in infrastructure such as
grading sheds and charcoal coolers, and loans to purchase inputs. It also provides services such as
market intelligence and market promotion. The technical and financial support has made it
possible for many farmers to meet the strict requirements and standards of the United Kingdom
supermarkets – the largest buyers of Kenyan fresh produce. By assigning groups of farmers to
different exporters it is now more profitable for exporters to contract with small-scale farmers
(Kherallah, 2010). This organization has thus addressed not only the issue of high costs in dealing
19
with smallholders, but also the problem of product quality and standards, which is a major
concern for most traders. If transaction costs of working together as a group are higher than those
associated with other institutional alternatives or working individually, the group will be
unsuccessful (Dorward and Kydd, 2003).
2.7 Maintaining and adding value through post-harvest handling technology
Value is usually defined in terms of the customers or consumers and thus customer value is linked
to use of product while it is perceived by customer, not determined by seller (Mudimigh
,2004).Sources of value have been shown to lie in features of products, such as price,
convenience, appearance ,nutrition, safety and reliability( FAO,2001). This has led to rise of food
safety, one of the most important issues in public and private concern which has made the
different actors aware that assuring safety of the final food product requires proper alignment of
activities of all participants.
Collective farming can be plagued by a variety of problems. The most contentious issue between
the parties is the determination of grading standards; contracts should specify commodities
grading, the respective price to be paid for each grade, and the criteria for rejecting substandard
output (GTZ,2007).Grading standards can be complex and open to subjective
interpretations.Indeed,arbitrary and unfair grading of commodities is the most common
complaint of contract farmers. Some contracting agencies apply more stringent interpretations of
standards and increase rejection rates when their markets become oversupplied
(Collins,2006).Indeed in some cases, fruit rejection rates have been over 50% (Glover and
Kusterer, 2007) ,and even more extreme cases, buyers have unilaterally terminated contracts.
Having a focus of the consumer as the ultimate ‘target of the activities of a chain is a
distinguishing feature of VCM (Collins,2006).Explanation of the VCM, such as that given by the
Agriculture and Food Council of Alberta[ AFC],2002) highlights that a value chain begins and
ends with market orientation. Interaction with market place provides information to decision
makers for every link in the chain. Although the quick growth of contract farming in the last
couple of years can be ascribed to the importance of grades and standards in the fresh food
industry, as established by multinational firms and consortia Reardon(2000), illustrates the
difficulty in enforcing such measures when dealing with a large number of smallholders.
Additional support from farmer or grass-roots organizations or the government will be needed to
20
ensure that this does not lead to the exclusion of smallholders from contracting opportunities due
to their non-compliance with food safety and quality standards (Frewer, 2003).
Much of agriculture is shifting from a philosophy from ‘here’s what we produce’ to a situation
where farmers take note of what the consumers want. New technology, which includes bio- and
information technology, makes it possible to ensure that agricultural and food products do have
the characteristics consumers want (Boehlje & Doering, 2000.). Apart from the pressures from
consumers and end-use markets, other major drivers and contributors to these changes in
agriculture include the following: Increasing competition from global market participants,
economies of size and scope in production and distribution, Risk mitigation and management
strategies of buyers and suppliers, Strategic positioning and market power/control strategies of
individual businesses, Increased levels of processing, improved productivity, new technology
forces have expanded the range of products ( USAID, 2004).
The value created through post harvest activities such as grading, processing, packaging, storage
and transport is targeted at meeting specific consumer requirements. By meeting these
requirements more precisely, reliably and economically more value can be created. When a chain
of collaborating firms is able to create value in this way, it not only strengthens the relationships
among the collaborating firms, but also builds relationships between the chain and its consumers.(
USAID et. al,). Aside from meeting the standards of individual companies, farmers are also
increasingly required to meet collective certification standards to show buyers and consumers that
certain quality, safety, environmental and/or ethical standards have been met (Penrose-Buckley,
2007).
However, Bollen, (2004) argues that in practice, it is rare to find a value chain that is able to
achieve high level of collaboration and value creation that involves every actor. In horticulture,
individual producers are relatively small in relation to their ability to service a market segment. It
is common for producers to form alliances among themselves, sometimes referred to as horizontal
alliances (Agriculture and food Council, 2002).It is also common for horizontal alliances of
producers to initiate the formation of value chains in horticultural industries. Collins (2004)
describes the type of activities that firms become capable of once a successful alliance has been
formed. These include; co-investing in research to better understand consumer needs seeking to
actively influence consumers, exploring new products, technologies or markets and providing
proof of authenticity.
21
Value can be achieved through four interconnected areas of activity. They are food safety,
traceability, information systems and consumer response to quality (Bollen,2004). Research show
that general consumer confidence in the motives of food producers and retailers has decreased
(Frewer, 2003), fueled by publicity surrounding outbreaks e.g. foot and mouth. While horticulture
has not been subject to this same level of public concern about its systems and outputs, there is
still enough publicity to keep food safety issues squarely in minds of consumer’s e.g. reports of
deaths from agricultural chemical contaminations of vegetables in china.FAO (2006) reports that
the incident of human food borne illness related to horticultural produce is low, but increasing due
to better microbial detection methods. He further suggests that every horticultural supply chain
needs food safety plan. Post harvest practices that ensure food safety add value through
confidence that instill in consumers (Frewer, 2003)
Food safety means avoiding microbiological contamination that exceeds defined limits. or
implementing and enforcing food safety standards and management systems that deliver value
100% of the time. Traceability in supply chains is also important because it gives evidence of
good agri-cultural practices and improves product segmentation (Bollen, 2004).it is impossible to
achieve traceability without at least some cooperation from every chain member.
2.8. Critical summary and Analysis of the literature review.
The literature emphasizes that fresh produce can no longer, be taken to the market on the off
chance that it will be purchased. Access to markets requires that produce be supplied through
market driven systems in which market requirements known prior to production are used in
specifying input quality as well as production practices . The success or failure of a horticultural
supply chain is ultimately determined by the degree to which produce satisfies consumer
requirements for quality and safety.
2.9 Research Gap
GlobalGAP (Good Agricultural Practices) is the single most important standard in international
food supply chains. However, there are contradicting findings on the costs and benefits of
certification at producer level in order to assess the high profile market (Doland and Humphrey,
2011). Several researchers argue implications for globalGAP has lead to increased exclusion of
individual smallholders from markets and increased their cost of operation. It is not clear whether
farmer groups have been able to meet the associated investments costs and comply with market
standards
22
2.10. Conceptual Framework
This explains the relationship between the independent and dependent variable, where the
independent variables (group networking, negotiation, logistical costs, post-harvest handling) are
a function of dependent variable (market access). The moderating variable (groups leadership and
financial status) are assumed to produce an interaction effect to both dependent and independent
variables while the extraneous variable (locality climatic conditions, Distance to the market, pests
and diseases) are from and determined from outside of the farmer group.
Figure 1-Conceptual framework
Extraneous variable
Independent Variables
Dependent Variable
Moderating variable
Figure 1-Conceptual framework. Source; Owner.
Networking -Affiliation to associations
-collaborating organizations -benefits from Networks
Mango market access -Presence of buyers in contract with groups -increase in membership participating in marketing -reduction on business costs and rejections -existence of mango value addition innovations and adoptions
Logistical costs -The marketing logistics - Cost per the logistic activities -Group payment methodology
Negotiation -Group involvement in negotiations -Parties involved in negotiation -variables negotiated on
Post harvest handling -Post handling initiatives and facilities -Rejections and other losses
The group characteristics -Group leadership -Groups financial status
The operating Environment -locality climatic conditions -Distance to the market -Pests and diseases
23
CHAPTER THREE
RESEARCH METHODOLOGY
3.1 Introduction
According to Mugenda Olive and Mugenda (1999), research methodology outlines the
techniques, methods and tools to be used in data analysis. The chapter is organized in following;
research design, Target population, sample size, Sampling techniques , research instruments,
reliability and validity of instruments, data analysis and presentation.
3.2 Research Design.
The study used descriptive survey design to investigate the factors influencing of mango market
access by the producer groups i.e through interviewing and administering of questionnaires to a
sampled group representatives and stakeholders. Cross tabulation was used to determine
relationships among two or more variables and to explore their implications for cause and effect.
3.3 Target population
A total 12 mango producer groups with total membership of 416 farmers were purposively
selected in the study. The groups exist within Meru central sub-county (Mwangathia and Kiagu
ward) i.e. the mango agri-ecological zones.
3.4 Sampling procedure and sample size
3.4.1 Sampling procedure
Purposeful and random sampling procedures were used to select the respondents who participated
in the study. Purposive sampling permitted selection of 5 stakeholders who understood and had
experience of the phenomena in question. Stakeholders selected were; agro-input supplier,
extension provider, buyer, finance supporter and advocacy institution. Random sampling was
applied to select the 120 individual farmer respondents from the mango producer groups.
3.4.2 Sample Size
Krejcie and Morgan (1970) formula was used to determine the sample size.
Where,
S = required sample size; N=the given population
24
P= Population proportion for the table, assumed to be 0.50 as this yields the maximum possible
sample size required
d= degree of accuracy as reflected in the amount of error, value being0.05
X2= 3.841 for the 0.95 confidence level
Based on Krejcie’s formula the sample size would be 180.However, Cohen (1988) argues if there
were too many subjects, even trivially small effect could be detected, but the findings would be of
insignificant value, wasting valuable time and resources. Based on the above justifications, the
sample size calculated using the formula derived from Cohen’s Statistical power analysis would
be more meaningful and acceptable. This number can be rounded up (to 116).Tto allow the
researcher to execute Cohen’s (1988) table for further analysis of the power level, A sample size
of 120 was sufficient to answer research objectives and cater for risk of unanswered questioners.
Table 3.1: Analysis of Mango Producer Groups, total membership and sample size
Mango Producers Group Name
No. of members
Sample Size % ge
1.Gaitu mango group 40 12 10
2.Kaguma Nkumbo 60 17 14.2
3.Mbajone 30 8 6.7
4.Nduruma 50 14 11.7
5.Njuthine 42 12 10.0
6.Nkumbo bamato 32 8 6.7
7.Runywene 30 8 6.7
8.Kamuga 60 17 14.2
9.Makandune mango growers 20 6 5.0
10.Kathwene mango growers 20 6 5.0
11.Gikuurune horticulture 15 4 3.3
12.Kiamuri 17 8 6.7
Total
416
120 100%
Mango Groups and membership database;. Source: MOA –Meru central District, (2013)
25
3.5 Research Instruments
This researcher used questionnaires and documentary analysis research instrument. 120
questionnaires were administered to the selected 12 mango producer groups’ individual farmer
representatives. The questioners were both open and close ended, organized as per the research
objectives namely; Networking, Negotiation, logistical costs and post harvest handling.
3.6 Reliability of the Research Instruments
A pre-testing (pilot study) was conducted at gikuurune horticultural group targeting two
individual farmers who were excluded from the main study. Reasons behind the pre-testing was to
assess the clarity of the instrument items .Those found to be inadequate in measuring the variables
were discarded or modified to improve the quality of the research instruments thus increasing
their reliability.
3.7 Validity of the Research Instruments
To acquire accuracy, meaningfulness and technical soundness of the research, the research
instrument was discussed with the supervisors. Any identified weakness of the instrument was
corrected as per the guideline.
3.8 Data Collection
Data was collected through administration of questionnaires to randomly selected group
member’s representatives during group meetings. Documentary analysis of the groups records
was used to draw some detailed data on groups’ market access e.g. on affiliations, parties
involved in negotiation, agreement and transaction cost per activity.
3.9 Data Analysis Method
The raw data obtained from the field was coded to classify answers to their respective questions
to get meaningful categories as per their research questions. Quantitative and qualitative methods
were used to analyze data. Statistical Packages for Social Sciences (SPSS) was applied to
generate and present tabulations for final analysis. The data from interviews and questioners was
organized in terms of the themes.
26
Table 3.2: Operationalization definition of variables table Objective Variables Indicators Measureme
nt of indicator
Data collection method
Measuring Scale/level of scale
Type of Analysis Independent
variable Dependent
1) To establish
the influence of
networking by
producer groups
on the mango
market access.
.
Networking
Mango Market access.
Affiliation / membership to organizations
-Membership receipts
- Questionnaire -Documentary analysis
Nominal
Descriptive
and
Inferential
-No. of organizations affiliated to
-Questionnaire -Interviews
Nominal Descriptive
and
Inferential
Collaboration with organizations
-No. and names of partnership Organizations -No. of partnership agreements -Terms of agreements
-Questionnaire -Documentary analysis
Nominal ordinal
Descriptive
and
Inferential
Benefits acquired from the Collaborations
-List and No. of benefits
-No. of market contracts
-Questionnaire -Interviews
Nominal
2) To determine
the influence of
negotiation with
buyers by
producer groups
on the mango
market access.
Negotiation Mango Market access.
Group Involvement in negotiation
No/Times of negotiations
-Questionnaire -Documentary analysis
Nominal
Descriptive
and
Inferential
Parties involved in negotiation
No. & names of parties
involved
Documentary analysis
Nominal
Descriptive
and
Inferential
Variables negotiated on
List of variables
-Questionnaire
nominal
27
Result of negotiation
-reduction in transport cost -change in mango price
-Questionnaire -documentary analysis
ordinal
3 To investigate
the effects of
logistical cost by
producer groups
on mango
market access.
logistical cost
Mango Market
access.
Activities which logistical costs are incurred
List of logistical activities to group marketing
-Questionnaire -documentary analysis
nominal Descriptive
and
Inferential
Activity Cost
Cost per logistical activity for each member
-Questionnaire -Documentary analysis
Ordinal
Group’s raising of transaction costs
-Methods -contribution per member
-Questionnaire
Nominal Ordinal
Failure to meet transaction costs
List of activities whose costs have difficulty in meeting
-Questionnaire
Nominal
4 To find out the
post-harvest
handling
measures by
producer groups
and its effect on
mango market
access.
Post- harvest handling measures
Mango Market access.
Group Post-harvest handling initiatives
-list of handling equipments
-Questionnaire -Documentary analysis
Nominal Descriptive
and
Inferential
Rejections
-No. of rejections -Total sum of rejections
-Questionnaire
Ordinal
Other losses (pests & diseases)
Cost as per for each member
-Documentary analysis
Ordinal
28
CHAPTER FOUR
DATA ANALYSIS, PRESENTATION AND INTERPRETATION
4.1 Introduction
This chapter deals with data analysis, presentation and interpretation of findings. It provides the
overall findings based on primary and secondary data which was collected from the field using
both open and close ended questionnaires, interviews and documentary analysis. The data
analysis was mainly descriptive using percentages, tables and frequency distribution and cross
tabulation to determine the relationship between independent and dependent variables.The data
analysis was done according to the research questions of the study. The findings were then
considered and interpreted.
4.2 Instrument response rate
A total of 120 questionnaires were administered and were all completed .The researcher and
research assistants administered the questionnaires themselves by visiting during the group
meetings and thus 100% response rate achieved.
A. Descriptive analysis
4.3 General information on respondents
It involved presenting the general characteristics of the respondent which included gender ,
number, age and varieties of mango trees, experience in collective marketing and current market
to understand their background and relate it to mango market access.
4.3.1 Gender distribution
The researcher found out that the 77.5% of respondents were male while 22.5% were female as
illustrated in table 4.1.
Table 4.1: Gender distribution
Gender Frequency Percent
Male 93 77.5
Female 27 22.5
Total 120 100.0
This could be attributed to the fact that majority of the mango farms are owned by men and thus it
follows that they are members of these groups involved in mango production and marketing.
29
4.3.2. Number of mango Trees
The researcher sought to find out number of trees.
Table 4.2. Number of mango Trees
No. of mango trees Frequency Percent
<60 3 2.5
61 – 100 42 35.0
>100 75 62.5
Total 120 100.0
62.5% of the farmers in the farmer groups sampled had planted over 100 Mango trees whereas
only 2.5% of the respondents claimed to have had less than 60 Mango trees.this indicated that
majority were in mango business.
4.3.3. Variety of Mango Trees
The respondents were asked on the variety of mango tree planted.
Table 4.3: Variety of mango tree planted
Variety Frequency Percent
Apple 24 20.0
Tommy 17 14.2
Kent 26 21.7
Ngowe 37 30.8
Vandyke 16 13.3
Total 120 100.0
30.8% of the farmers had the Ngowe mango variety on their farms. This is best for local and
processing market. A further 20% with the apple variety best preferred for export market. This
meant that mangoes could be sold at local, processing or export markets
4.3.4. Experience with group collective marketing
Data on experience with collective marketing was collected.
30
Table 4.4: Experience in collective marketing
Experience Frequency Percent
Yes 91 75.8
No 29 24.2
Total 120 100.0
75.8% of the respondents claimed to have some experience with group collective marketing while
24.2% claimed not to have experience. This indicated that farmers had made initiative in
collective action approach to access mango markets.
4.3.5: Current engagement in collective marketing
The researcher sought to find out current practice in marketing.
Table 4.5: Current engagement in collective marketing
Frequency Percent
Yes 41 34.9
No 79 65.1
Total 120 100.0
A majority of 65.1% of the total respondents in producer groups were not involved in collective
marketing at the time, while 34.9% were still in collective marketing arrangements. This pointed
out a withdraw of mango farmer from collective marketing initiative.
Table 4.6: Market place
Market Frequency Percent
Farm gate
Local
Export
68
45
7
56.7
37.5
5.8
Total 120 100.0
Majority by 56.7% groups members sold their mangoes at farm gate while the least 5.8% afforded
to sell at export market.
4.4. Networking
The researcher found out if mango farmers were collaborating with others in their business.
31
4.4.1. Collaborations
Table 4.7: Collaboration with other partners Frequency Percent
Yes 63 52.5 No 57 47.5 Total 120 100.0
Slightly more farmers in the producer groups sampled were collaborating with other
organizations, compared to 47.5% of the respondents who were not collaborating with any other
organization/partners.
4.4.2. Classification of the partners
Table 4.8: Category of partners Category Frequency Percent
Other groups’ members 29 24.2 Government 11 9.1 NGOs 23 19.2 Association / Federation 0
N/A 57 0.0 47.5
Total 120 100.0
Of those farmers in the producer groups who were collaborating with other organizations 24.2%
of them were collaborating with other groups’ members. 19.2% of the respondents with NGO’s
while 9.1% collaborated with the government. No collaboration with any farmer federation. This
indicated weaknesses of the mango associations.
4.4.3. Marketing Support received from the collaborations
The researcher sought to find out any benefits accrued from the collaboration
Table 4.9: Mango marketing support
Support Frequency Percent
Information exchange 08 6.7 Technical expertise 30 25.0 Lobby and advocacy 00 0.0 Market linkaging 19 15.8 n/a 63 52.5 Total 120 100.0
32
Majority of 25% responses on benefits from collaborations 25% said the collaboration was for
technical expertise while a only 15.8% claimed that it was for market linkaging .0.0% had not
acquired lobby and advocacy support. This still indicated weaknesses of the mango associations.
4.5. Negotiation.
The researcher found out weather the mango farmers had been involved in Negotiation with their
buyers.
4.5.1 Engagement in negotiation
Table 4: 10:Engagement in negotiation platform with buyers
Engagement Frequency Percent
Yes 91 75.8
No 29 24.2
Total 120 100
A majority 75.8% of the farmers in the producer groups claimed to have been involved in
negotiation process with their buyers while 24.2% were not involved. Probably because they had
not participated in collective marketing.
Majority of 79.2% of the respondents in the producer groups had left the duty of negotiating on
marketing terms to the group committees. 12.5% had negotiation task done by third parties while
8.3% of the respondents do it while in the group. This showed that third parties were playing
negotiation role rather than facilitating the process.
33
4.5.3. Marketing variables negotiated on.
The respondents were asked on the variables negotiated on.
Table 4.12: Variables negotiated on.
Variables Frequency Percent
Input supply 3 2.5
Pricing 32 26.7
Delivery schedule 15 12. 0
Transportation cost 19 15.8
Grading criteria 25 20.8
Payment schedule 26 21.7
Total 120 100
The pricing with 26.7% was the item highest negotiated on for the mango marketing. Input supply
was the least negotiated on, accounting for 2.5%.Payment schedule at 21.7 % came second. While
grading criteria was third variable most negotiated. This could closely relate to fear on rejections
and losses. Delivery schedule was at 12% due to reasons that most farmers mangoes were
purchased at farm gate level.
4.5.4. Type of Agreement
Table 4.13: Type of agreement existing between the farmer and mango buyers.
Type of agreement Frequency Percent
Mutual agreement 116 96.7
Contract 4 3.3
Total 120 100
A majority of farmer groups had mutual agreements with the buyers, only 3.3% of the farmers
within producer groups had contacts signed to such agreements.
4.5.5. Breach in marketing agreement
The researcher sought to find out whether the mango farmers had encountered breach of the
marketing agreement
34
Table 4.14: Breach in marketing agreement
Breach Frequency Percent
Yes 103 85.8
No 17 14.2
Total 120 100
85.8% of the respondents had encountered a breach of agreements with their buyers while a
minority, 14.2% of the respondents claimed to had never encountered a breach of agreements.
This was associated with farmers with young mango trees.
4.6. Logistical Costs in Marketing
The respondents gave data on the logistical costs met during the marketing process and how the
costs are met among the group members. The costs were also rated.
4.6.1. Logistical costs rating.
The participants rated the logistical cost incurred during group marketing as shown in table 4.15..
Table 4.15: logistical cost rates
Cost Frequency Percent
Negotiations 2 1.7 Supervisory 20 16.7 Enforcement 14 11.7 Transportation 79 65.8 loading/packaging 5 4.2
Total 120 100.0
65.8% of the respondents indicated that transportation contributed the highest cost of logistic.
This was associated with the road networks from farms to market. Supervision of group members
during marketing accounted for 16.7%. The least by 4.2% rated loading/packaging as contributor
to logistic cost. This showed that loading item as a factor of logistic was not much of a problem to
address by farmers in producer groups.
4.6.2. How logistical costs are met
The researcher found out means by which logistical costs were met by members in producer
groups.
35
Table 4.16: Meeting of logistical costs.
Cost meeting Frequency Percent
Individual member contribution 60 50.0
Group savings 18 15.0
Buyer 42 35.0
Total 120 100
Half of the farmer producer groups met the logistical costs through own contribution. A
further 35% of the respondents claimed that the logistical costs were met by the buyer.
These could be the transportation from the farm, harvesting and loading for selling at
farm gate. 15% of the respondents claimed that this cost was met through the group
savings. This was associated with farmers who sold and delivered collectively.
4.7. Post harvest handling Technology.
The researcher sought to know the post harvest technologies owned by farmers
Table 4.17: Post harvest technology.
Technology Frequency Percent
Cooler 6 5.0
None 114 95.0
Total 120 100.0 Only 5% of the respondents had a post harvest support technology which was a cooler owned by
one group. 95% owned neither a grader nor processor.
4.7.2.If none, why? Table 4.18: Reasons for lack of technology Reasons Frequency Percent
High cost 95 79.2 Ignorance 11 9.2 lack of awareness 10 8.3 n/a 4 3.3
Total 120 100.0
36
Of those farmers in producer groups who don’t have any post harvest technology 95% associated
cost (high) as the reason why they did not have. A further 8.3% claimed not to be aware that these
technologies existed.
4.7.3. Mango losses from rejections
Table 4.19: Rejections
Frequency Percent
Yes 93 77.5
No 27 22.5
Total 120 100.0
Majority of farmers in producer groups claimed to have incurred some losses resulting from
rejection of their Mangoes. This represented 77.5 % of the farmer in producer groups sampled. A
further 22.5% of these respondents claimed not to have incurred some losses.This was associated
with farmers who had young trees.
Table 4.20: reasons resulting to mango rejection.
Reason for rejection Frequency percent
Field pest & Disease infection 14 11.7
Over-ripening 79 65.8
Delivery time 2 1.7
Lack of required variety 20 16.7
Lack of sorting or grading 5 4.2
Total 120 100.0
65.8% of the respondents associated over-ripening as the main cause of rejection. This was
followed by lack of required variety at 16.7%. Only 1.7% of the respondent associated this to
delivery time, which was associated to the fact that farmers were selling their mangoes at farm
gate.
37
B. INFERENTIAL ANALYSIS - CROSS TABULATION.
4.8. To Establish the Influence of Networking by Groups on the Mango Market access Table 4.21: Influence of collaboration on collective marketing
Do you have experiences with collective marketing? * Are you collaborating with any other
organization/partners to access the market
Are you collaborating with any organization/partners?
Total Yes No
Do you
have experiences
with collective
Marketing?
Yes Count 50 41 91
% within Do you
have experiences
with groups collective
marketing?
54.9% 45.1% 100.0%
No Count 13 16 29
% within Do you have
experiences with groups
collective marketing?
44.8% 55.2% 100.0%
Total Count 63 57 120
% within Do you have
experiences with groups
collective marketing?
52.5% 47.5% 100.0%
55.2% of those groups’ members who did not have experience in collective marketing were still
not collaborating with other organizations. A further 45% of the individuals in group sampled
claimed to have experience in collective marketing and at the same time they claim there to be no
collaboration with other partners. We thus see more farmers not in partnership. This was
associated with the fear of involvement in collective action activities and thus can conclude that
individual members collaboration with partners could have influenced market place and
marketing support.
38
Table 4.22: Influence of collaboration on current engagement in collective marketing
Are you currently engaged in collective marketing? * Are you collaborating with any other
organization/partners Cross tabulation
Are you collaborating with any organization/partners?
Total Yes No
Are you currently
engaged in collective
marketing?
Yes Count 41 0 41
% within Are
you currently
engaged in
collective
marketing?
100% 0% 100.0%
No Count 22 57 79
% within Are
you currently
engaged in collective
marketing?
27.8% 72.2% 100.0%
Total Count 63 57 120
% within Are
you currently
engaged in
collective marketing?
52.5% 47.5% 100.0%
% of Total
Of the farmers in the groups sampled, 72.2% claimed to be not involved in collective marketing
at the time of data collection, and were further not in collaboration with any partner. This directly
could have affected their technical expertise in production and thus affect market access to high
profile markets. Thus can conclude that collaborations influence the market access and producer
groups collective marketing .
39
4.9. To determine the influence of negotiation by producer groups on the mango market access in Meru central sub-county.
Table 4.23: Influence of negotiation on the market access.
A majority 80.9% of the respondents who market their produce with Farm gate confirmed that
they were involved in negotiations for their produce. A further 68.9% of those farmers in the
groups who market their mango produce at the local markets further said they were involved in
negotiations for their produce. Similarly 71.4 of those respondents who took their products to
Where do you market your product at the moment * Have you engaged in negotiation process
with your buyer? Cross tabulation
Have you engaged in negotiation process with your buyer?
Total Yes No
Where do you market your mangoes at the moment
farm gate Count 55 13 68 % within where do you
market your product at
the moment
80.9% 19.1% 100.0%
local market
Count 31 14 45 % within where do you market your product at the moment
68.9% 31.1% 100.0%
export Count 5 2 7 % within where do you market your product at the moment
71.4% 28.6% 100.0%
% of Total 4.2% 1.7% 5.8%
Total Count 91 29 120 % within where do you market your product at the moment
75.8% 24.2% 100.0%
% of Total 75.8% 24.2% 100.0%
40
export markets confirmed that they did involve in negotiations for their mango products. This
confirms the assertion that negotiation affects mango market access in a positive manner.
Table 4.24: Influence of the nature of agreement on market access.
Are you currently engaged in collective marketing? * What type of agreement exists between the
farmer group and buyer? Cross tabulation
What type of agreement exists
between the farmer group and
buyer?
Total
mutual
agreement Contract
Are you currently
engaged in collective
marketing?
Yes Count 37 4 41
% within Are
you currently engaged in
collective marketing?
90.2% 9.8% 100.0%
no Count 79 79
% within Are
you currently engaged in
collective marketing?
100.0% .0% 100.0%
Total Count 116 4 120
% within Are
you currently engaged in
collective marketing?
75.8% 24.2% 100.0%
% of Total 75.8% 24.2% 100.0%
All the respondents who were not involved in any collective marketing also had just a mutual
agreement with the buyer. A further 90.2% of the farmers in the groups who had some mutual
agreement with the buyers claimed to engage in some collective marketing for their mango
produce. Minority of 9.8%, who had contracts were involved in collective market. We thus
associate the nature of agreement made to positively influence the approach of mango marketing
by farmers within groups.
41
4.10. To investigate the effects of logistical cost by producer groups on mango market access
in meru central sub-county.
Table 4.25: Influence of the logistical cost on collective market access
73.2% of the respondents who claimed that transportation accounted for highest cost among other
logistics were also engaged in collective marketing. Those still not involved in collective
marketing rated transportation cost highest in mango marketing .there is a positive relationship
between transport cost and collecting group mango marketing.
4.26: Influence of the Logistical Cost on Market place
Are you currently engaged in collective marketing? * what contributes the highest cost of logistic Cross tabulation what contributes the highest cost of logistic
Total
Negotiatioon
Supervisory
Enforcement
Transportation
Loading Packaging
Are you currently engaged in collective marketing?
Yes Count - 2 8 30 1 41 % within Are you currently engaged in collective marketing?
0.0% 4.9% 19.5% 73.2% 2.4% 100.0%
No Count 2 18 6 49 4 79 % within Are you currently engaged in collective marketing?
2.5% 22.9% 7.6% 62% 5.1% 100.0%
Total Count 2 20 14 79 5 120 % within Are you currently engaged in collective marketing?
1.7% 11.7% 16.7% 65.8% 4.2% 100.0%
% of Total 1.7% 11.7% 16.7% 65.8% 4.2% 100.0%
42
48% of the farmer groups members sampled and who market their produce at the local market had
their logistical costs met by the buyer. This would in return be deducted from the final sale of
their mangoes and in return lower sale price. A further 57% of the farmer groups sampled and
who sold their mangoes to the export market contributed all their cost associated with logistics.
Thus we can conclude that lack of enough money to finance logistical costs affects negatively the
market access. This is moreover was affirmed by the fact that 63% of the respondents who funded
their logistical costs from group contribution also accessed the market to some well established
markets e.g. processor.
Where do you market your product at the moment * How do you meet the logistical costs?
Cross tabulation
How do you meet the logistical costs?
Total
Individual member contribution
Group savings Buyer
where do you market your mangoes at the moment
farm gate Count 43 6 19 68 % within where do you market your product at the moment
63.2% 8.8% 27.9% 100.0%
local market Count 13 10 22 45 % within where do you market your product at the moment
28.9% 22.2% 48.9% 100.0%
Export Market
Count 4 2 1 7 % within where do you market your product at the moment
57.1% 28.6% 14.3% 100.0%
Total Count 60 18 42 120 % within where do you market your product at the moment
50.0% 15.0% 35.0% 100.0%
% of Total 50.0% 15.0% 35.0% 100.0%
43
4.11.To find out the post-harvest handling measures by producer groups and its effect on mango market access in meru central sub-county. Table 4.27:The influence of the post harvest handling technologies on market access.
Majority of the respondents had no post-harvest handling technology, hence sold at farm gate or
or local markets of the.85.7% of the respondents who had post harvest support technology, they
exported their produce (mango) or sold to processors. Post harvest technology availability
determined the kind of market accessed. This indicated the different quality requirements for
different markets.
Where do you market your product at the moment * What post harvest handling support technologies support do you have ? Cross tabulation What post harvest handling
support technologies support do you have?
Total Cooler None where do you market your product at the moment
farm gate Count 0 68 68 % within where do you market your product at the moment
0.0% 100.0% 100.0%
local market Count 0 45 45 % within where do you market your product at the moment
0.0% 100.0% 100.0%
Processor/ export Count 6 1 7 % within where do you market your product at the moment
85.7.% 14.3% 100.0%
Total Count 6 114 120
% within where do
you market your
product at the moment
5.0% 95.0% 100.0%
% of Total 5.0% 95.0% 100.0%
44
Table 4.28: The effect of post harvest technology on marketing agreement
44.1% and 46.7%,who sold at farm gate and local market respectively, suffered losses as a result
of less paid price for their mangoes due to rejection resulting from postharvest handling issues.A
positive relationship was thus shown to exist between postharvest handling measures and mango
marketing.
Have you incurred losses through rejection?
Where do you market your product at the moment * If yes, what effect had it on the market?
Cross tabulation
If yes, what effect had it on the
market?
Total
Rejection
by buyer
less price
paid
Terminatio
n contract Na
where do you market your product at the moment
farm gate
Count 25 30 0 13 68 % within where do you market your product at the moment
36.8% 44.1% .0% 19.1% 100.0%
local market
Count 12 21 1 11 45 % within where do you market your product at the moment
26.7% 46.7% 2.2% 24.4% 100.0%
export Count 2 2 0 3 7 % within where do you market your product at the moment
28.6% 28.6% .0% 42.9% 100.0%
Total
Count 39 53 1 27 120 % within where do you market your product at the moment
32.5% 44.2% .8% 22.5% 100.0%
% of Total 32.5% 44.2% .8% 22.5% 100.0%
45
CHAPTER FIVE
SUMMARY OF FINDINGS, DISCUSSIONS, CONCLUSIONS & RECOMENDATIONS
5.1 Introduction
This chapter presented the summary of findings, discussions conclusion and recommendations of
the study findings. The aim of the study was to analyse the factors influencing mango market
access by the producer groups in Meru central sub-county.
5.2. Summary of findings
The researcher found out that the 77.5% of respondents were male while 22.5% were female an
indicator that majority the mango farms were owned by men and thus the nature of mango
producer groups’ nature of membership. Of the respondents, Majority of 62.5% had over 100
Mango trees on their farms. Whereas .showed that majority were in mango business.30.8% of the
farmers had the Ngowe mango variety on their farms, best for local and processing market. A
further 20% with the apple variety best preferred for export market. This meant that mangoes in
the locality could be sold at local, processing or export markets.75.8% of the respondents claimed
to have had experience with group collective marketing while 24.2% did not have .Further, 65.1%
of the total respondents in producer groups were not involved in collective marketing at the time
of data collection, while 34.9% were still in collective marketing arrangements. This pointed out
a withdraw of mango farmer from collective marketing initiative.
Selling of the mangoes was at mostly at farm gate as represented by 56.7% groups’ members and
the least of 5.8% afforded to sell at processing or export market. Thus an issue in accessing upper
markets.
Slightly more farmers within the producer groups sampled were collaborating with other
organizations, compared to 47.5% of the respondents who were not collaborating with any other
organization/partners. Of those farmers who were collaborating with other organizations 24.2% of
them were collaborating with other groups’ members. 19.2% of the respondents with NGO’s
while 9.1% collaborated with the government. No collaboration with any farmer federation. This
indicated weaknesses of the mango associations or ability of farmers to transform their groups to
other entities. On benefits acquired from collaborations, 25% said the collaboration was for
technical expertise while a only 15.8% claimed that it was for market linkaging .0.0% had not
acquired lobby and advocacy support. This still indicated weaknesses of the mango associations.
46
A majority 75.8% of the farmers in the producer groups claimed to have been involved in
negotiation process with their buyers while 24.2% were not involved. Probably because they had
not participated in collective marketing. 79.2% of the respondents had left the duty of negotiating
on marketing terms to the group committees,12.5% had negotiation task done by third parties
while 8.3% of the respondents did negotiation while in the group. This showed that third parties
were playing negotiation role rather than facilitating the process.The pricing with 26.7% was the
item highest negotiated on for the mango marketing. Input supply was the least negotiated on,
accounting for 2.5%.Payment schedule at 21.7 % came second. While grading criteria was third
variable most negotiated. This could closely relate to fear on rejections and losses. Delivery
schedule was at 12% due to reasons that most farmers mangoes were purchased at farm gate level.
Only 3.3% of the mango farmers had contacts signed to sale agreements.This showed majority
had no specific market for sale.
Transportation contributed the highest cost of logistic as represented by 65.8% of the respondents.
This was associated with the road networks from farms to market. Supervision of group members
during marketing accounted for 16.7%. The least by 4.2% rated loading/packaging as contributor
to logistic cost. This showed that loading item as a factor of logistic was not much of a problem to
address by farmers in producer groups.Half of the farmers met the logistical costs through own
contribution. A further 35% of the respondents claimed that the logistical costs transferred by the
buyer. This was the transportation from the farm, harvesting and loading for selling at farm gate.
15% of the respondents claimed that this cost was met through the group savings. This was
associated with farmers who themselves sold and delivered collectively to processing market.
Only 5% of the respondents had a post harvest support technology which was a cooler .Of those
farmers in producer groups who don’t have any post harvest technology 95% associated this to
high cost A further 8.3% claimed to be unaware on existence of these post harvest
technologies.Over-ripening was rated highest by 65.8% of the respondents as the main cause of
rejection. This was followed by lack of required variety at 16.7%. Only 1.7% of the respondent
associated this to delivery time, which was associated to the fact that farmers were selling mostly
at farm gate.
47
5.3. Discussions
5.3.1 To establish the influence of networking by producer groups on the mango market
access in Meru central sub-county.
55.2% of those groups’ members who did not have experience in collective marketing were still
not collaborating with other organizations. A further 45% claimed to have experience in collective
marketing but were not in collaboration with other partners. We thus see more farmers not in
partnership. However of those who were in collaboration, market linkaging support was after
technical expertise and information. The collaborations benefits were not on market access. This
proved van Roekel (2002) who pointed out that it is evident that penetration of desired market
position cannot be achieved sorely. Thus, ability to access market by these mango farmers in
producer groups was influenced by the kind of partners they partnered with and services they
offered.
5.3.2 To determine the influence of negotiation by producer groups on the mango market
access in Meru central sub-county.
A majority 80.9% of the respondents who marketed their produce at Farm gate confirmed that
they are involved in negotiations for their produce. A further 68.9% of those farmers in the groups
who marketed their mango produce at the local markets further said they were involved in
negotiations for their produce. Similarly 71.4 of those respondents who took their products to
export markets confirmed that they did involve in negotiations for their mango products.
However, all the respondents who were not involved in any collective marketing had just a
mutual agreement, with the buyer. Minority of 9.8%, who had contracts were also involved in
collective market and could penetrate processing and export markets. We thus associated the
negotiation on marketing terms and nature of market agreement in place to have positively
influenced the mango market place of mangoes.
5.3.3 To investigate the effects of logistical cost by producer groups on mango market access
in meru central sub-county.
73.2% of the respondents who claimed that transportation accounted for highest cost among other
logistics were also engaged in collective marketing. Those still not involved in collective
marketing rated transportation cost highest in mango marketing .There is a positive relationship
48
between transport cost and collecting group mango marketing.48% of the farmer groups members
who marketed their produce at the local market had their logistical costs met by the buyer. This
was in turn deducted from the final sale price of their mangoes and in return lower payment. This
indicated farmers who sold at farm gate were not ready to incur costs.This also confirmed
Delgado (1999), who argued that most commodity-specific transaction costs arise in marketing
stage and the smallholder farmer who are spatially dispersed are not ready to incur. A further 57%
of the respondents and who sold their mangoes to the export market contributed all their cost
associated with logistics. Thus we can conclude that refusal of mango farmers to collectively
contribute to the logistical costs affects negatively their collective market access. This is moreover
was affirmed by the fact that 63% of the respondents who funded their logistical costs from group
contribution also accessed the market to some well established markets e.g. processor.
5.3.4 To find out the post-harvest handling measures by producer groups and its effect on
mango market access in meru central sub-county
Majority of the farmers did not have post harvest handling techniques. hence sold at farm gate or
or local markets.Of the 17.2% of the respondents who had post harvest support technology,
which was a cooler ,exported their produce. 36.8% of the respondents who marketed their
produce at farm gate also confirmed to have had rejections mostly resulting from overipening and
a further 26% and 28% to local and export markets respectively. It is evident from Collins (2006)
that in some cases, fruits rejection rate have been over 50% and even in extreme cases, buyers
have unilaterally terminated contracts. Post- harvest technology availability therefore determined
the kind of market accessed, due to the different quality requirements for different markets.
5.4. Conclusions
Despite the fact that collaboration with stakeholders existed, its benefits to mango farmers was
not on market linkaging. Thus, ability to access market by the mango farmers in producer groups
was influenced by the kind of partners and services they received. Negotiation had also been done
with buyers but mutual agreements were more in operation. The nature of agreement made
positively influenced the market place of mangoes. For the few who had contract agreement, had
ability to sell to upper markets. It was evident that despite involvement in collective marketing,
members did not meet the logistical costs fully. Most costs at marketing was met by farm gate
49
buyer and in turn deducted from the sale price of their mangoes. Farmers in return received lower
payment. Ignorance of farmers to try meeting some logistical costs negatively risked their ability
to penetrate higher markets access. Un-availability of Post harvest technology led to rejections
and losses during marketing.Availability of post harvest technology also influenced the kind of
market accessed.
5.5. Recommendations
To mango producer groups
1. To increase access to market, Mango groups should collaborate more with partners with market
linkaging support.
2. Mango groups should transform their market agreements with buyers into contracts, and
specify on mango delivery quality and variety to reduce rejections.
3. Mango farmers and their groups should venture in transportation business themselves. With
this they can compare payment price when mangoes are picked by buyer at farm gate with own
delivery.
To farmer associations
4. The farmer association in the locality should participate in negotiation and advocacy activities
to develop the mango value chain
To the stakeholders
5. For enhanced Agribusiness, stakeholders in the value chain should plan for mango variety
improvement, post- harvest handling and market linkaging programmes
5.6. Suggestions for further research
For further research, the study recommends that the following studies be carried out.
1. Research to be carried out on whether increased access to technical expertise of mangoes has
led to improved quality and produced quantities in Meru central sub-county.
2. A research be carried out to establish if the required mango quantity, quality and variety
50
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APPENDIX 1: LETTER OF TRANSMITTAL.
Judith Nkatha Maitai
P.O. Box 23,
Kianjai.
12th April 2013.
To Whom It May Concern:
Dear sir/madam,
RE: REQUEST FOR COLLECTION OF DATA
I am a student at University of Nairobi (UoN) pursuing a Masters degree in Project Planning and
Management. In fulfilment for the requirement of the award of a master’s degree, I am conducting
a research project the factors influencing mango market access by the producer groups–Meru
Central sub-county. I’m therefore requesting you to assist complete the questionnaire. Any
information given will be used for the study only and treated with confidentiality. Thanks
Yours faithfully
Judith Nkatha Maitai.
L50/60900/2011.
57
Appendix 2 ; Group and Individual farmer questionnaire.
This questionnaire will research on the factors influencing mango market access by the producer
groups in Meru central sub-county. The information provided in this questionnaire will be used
for research purpose only and will be treated with utmost confidentiality. Please answer every
question by ticking the applicable box that answers the respective question as honestly and
completely as possible. You may also add comments where necessary and where you may have
more information than the options provided.
PART A
Section one - Respondent details
Date of Interview Group Name
1 Gender Male Female
2 No. of mango trees < 60 60-100 >100
3 Variety
Apple T Tommy Kent Ngowe vadyke
4 Do you have experiences with groups
collective marketing? Yes No
5 Are you currently engaged in collective
marketing? Yes No
6 Which is your current market place?
Farm gate Local Export market
PART B
Section one; Groups’ networks and its influence
7) Are you affiliated to any association or Federation or Organization?(Please Name it).
Yes No
8) Are you collaborating with any other organization / partners?
Yes No
9)If yes above, please indicate the category
58
a) Other groups members b) Government c) NGOs d) Farmer associations/federations
10) Please list the partner organizations
11) What marketing support have you have received from these Associations and organizations? a) Information exchange b) Technical expertise c) Lobby & advocacy
d) Market linkaging
Section two; Groups’ negotiations and its influence
12) Have you engaged in negotiation process with your buyer? Yes No
13) Who was involved the negotiating? i) Entire group ii) Group committee iii) third party
14) What variables were negotiated on? i) Input supply ii) Pricing iii) Delivery schedule
iv) Transportation v) Grading criteria vi) Payment schedule
15) What type of agreement exists between the farmer group and buyer farm? i) Mutual agreement ii) Contract
16) Have you ever encountered a breach of the marketing agreement?
Yes No
Section three; Logistical costs
17) What are the logistics incurred in the marketing activity? i) Negotiation ii) Supervisory iii) Enforcement
iv) Transportation v) loading/packaging vi) Grading 18) How do you meet the logistical costs? i) Individual member contribution ii) Group savings iii) Buyer iv) Group cost sharing with buyer
19) Has there been a failure with group members in meeting some activities costs?
Yes No
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20) If Yes, which logistical costs have had difficulty in meeting? i) Negotiation ii) Supervisory iii) Enforcement
iv) Transportation v) loading/packaging vi) Grading
21) What do you think is the cause?
i) High cost ii) Ignorance iii) lack of capacity Section four; Post harvest handling measures
22) What post harvest handling support technologies support do you have?
i) Sorters & graders ii) Driers iii) coolers/refrigerators iv) Processors
23) If none, why?
i) High cost ii) Ignorance iii) lack of awareness
24) Have you ever incurred any losses resulting from Rejection?
Yes No
25) If yes, what effect had it on the market?
i) Rejection by buyer ii) less price paid iii) Termination of contract
26) Reasons for the rejection?
i) Field pest & disease infection ii) over –ripening ii) delivery time
PART C
27) Problems/challenges faced by the group in mango marketing?
28) Are there any things you would like to be added to/regulated in your marketing contract?
(Please give comment)
Thank you for participating in this research work.
Interviewer Name __________ Phone_________________Signature _____________
Supervisor Name ___________ Phone_________________Signature _____________
60
Appendix 3 -Stakeholders’ interview guide
This questionnaire attempts to research on the influence of mango producer groups on operation
of contract marketing arrangement. The information provided in this questionnaire will be used
for research purpose only and will be treated with utmost confidentiality. Please provide as much
information as possible.
Background information about the stakeholder
Organization: Respondent’s Name:
Date of Interview: Contact:
Core business with mango farmers
1. Do you have experiences with collective marketing with mango groups?
Yes No
2. If yes, in what whys do you collaborate with them?
a) Strengthening their networks/linkages
b) Participation in negotiations
c) Contribution to meeting transactional costs
d) Supporting in to postharvest handling
f) Technical information provision
e) Conflict resolutions
3) Have you encountered a breach of the agreed contract in your collaboration?
Yes No
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4) Please share with us some of reasons for the breaches encountered?
5) How did the mango group involve you in resolving the issue?
6) How do you rate the relationship between mango farmer groups and buyers?
a) Very strong b) Strong c) Moderate d) Weak e) Very weak
7) In your own view, how could have the collaboration of farmer group with your organization
and others affected the market access?
8) Have you had successful or failure experience about the mango marketing?
Yes No
9) If yes, please explain.
10. What recommendations do you give for successful mango marketing?
a) To farmer groups
b) To buyer firms
Thank you for participating in this research study.
Interviewer Name __________ Phone_________________Signature _____________
Supervisor Name ___________ Phone_________________
62
Appendix 4; Time schedule and Budget.
Time schedule
Activity Month
Jan Feb Mar Apr May Jun
Proposal writing
Proposal correction
Proposal defense,
corrections and
piloting
Data correction and
analysis
Report writing,
correction and
submission of report
Project report
presentation and
defense
Budget
Activity/item Description No. of items Cost per item Total cost Stationary Pencils 120(10 dozens) 120 1,200 Spring files 3 50 150 Photocopies and printing
Questioners photocopies 140* 5 pages=700 pgs
3 2,100
Proposal photocopy 6 300 1,800 Final report photocopies 6 300 1,800 binding 12 copies 50 700 Piloting Transport 1 day 1000 1,000 subsistence 1 day 1000 1,000 Data collection Daily transport 15 days 1000 15,000 subsistence 15 days 500 7,500 Research assistance 1 assistance,15 days 1000 15,000 Total Expenses 31,750 Sponsor; Self
63
Appendix 5: HCDA: Code of Conduct for Fresh Horticultural Produce Sales
The Code of Conduct is an agreement between the "Buyer" of fresh horticultural produce and the "Seller" or grower of the produce. The Code of Conduct should act as a memorandum of understand-ing and as guideline for the buyer and the seller in order to conduct good business practices which will be mutually beneficial and help promote the well being of the horticultural industry in Kenya. Fur-thermore, it acts as a framework to the development of a legally binding contract to be executed by the buyer and the seller. Obligations Seller's Obligations Farmers should be organized into well-managed groups and be registered with the Ministry of Culture and Social Services or any other authority. Specific outgrower groups should relate to specific buyers under a contract. Farmers should request for training on any aspect that deals with quality control as need arises. Buyer's Obligations Specific exporters/processors should relate to specific outgrower groups under a contract and provide reasonable extension services. The buyers should relate directly to their outgrowers and respect other companies and not try areas where other exporters/processors have developed schemes. Export-ers/processors/others should endeavor to establish means and ways of financing their groups and also try and encourage groups' self-financing. Dual Obligations • Both parties should be loyal to each other in the spirit and terms of the contract. • Both parties should be involved when drawing up contracts. MOA, HCDA & Other NGO's Obligations • MOA as a witness will ensure that all parties abide to the contract regulations and provide
sufficient support to both parties. • HCDA as a witness will monitor the activities of both parties under the Legal Notice Number
231 cited as then HCDA (Export) Order 1995. • Other NGOs working directly or indirectly with horticultural farmers will collaborate with
MOA, HCDA, and the local administration in guiding both sellers and buyers. CONTRACT GUIDELINE Exporters and outgrower groups shall engage in the execution of a contract before conducting busi-ness. A contract must include specific terms and conditions of payment, responsibilities for produc-tion, handling and collection of produce, and any other essential elements 1. Quantity and quality of produce to be supplied
The contract should specify the quantity in either boxes/cartons /crates or kilos over a period of time, supplied from a certain production area. A schedule of prices shall be identified for differentials in quality. Contract shall specify a minimum quantity of produce to be provided by seller (i.e. quantity below which no collection will be effected). Seller and buyer agree to produce
64
and market high quality levels of produce and further specify levels of quality for produce that must be delivered by groups. (The KBS standards, NRI manual for horticultural export quality assurance, and any other requirement by specific importers should be used as referral guidelines for acceptable quality levels.) 2. Seed and other Inputs
Buyer and seller agree upon who is responsible for supplying high quality certified seeds/planting materials to the grower. If buyer requires the use of certified seeds/planting materials by the seller, it must be specified in the contract. Contract must address which party will be responsible for supplying and applying other inputs such as fertilizer and pesticides. Terms and conditions for purchase, sale of inputs must be included within the contract. Individual growers, groups, organisations and/or their members will be responsible to cover all obligations to buyers who supply inputs. 3. Generally Accepted Production Practices
Sellers shall agree to undertake production practices and procedures, which are necessary, and conducive to producing highest quality produce whether for fresh export markets, processed markets (canned, frozen, etc.) or local markets. Such practices include use of approved pesticides, proper application of pesticides according to the labels of the manufacturers, and the use and proper application of fertilizers which are recommended for the type of produce to be grown. Where applicable, buyers and sellers agree to co-operate in random testing of produce for the purpose of detection of pesticide residues. 4. Record Keeping In order to ensure product safety, highest quality levels, full traceability and accountability, buyer and seller shall agree on a complete record keeping system for production and handling of produce. Mini-mum requirements for record keeping should include: Identification of previous crop , Type of seed used, treatment of seed ,Date of planting ,Herbicide applications: date and rate Pesticide applications: product, date, rate, and weather conditions Harvesting: dates 5. Field Support and Training
Sellers should be provided with sufficient training on group administration, proper production, handling and grading techniques on a periodic basis. Where appropriate, the buyer shall work in conjunction with MOA, KARI, HCDA, and any other relevant agencies, in order to ensure achievement of highest quality levels and contract performance. 6. Harvesting and post-Harvest Practices
Seller should agree to undertake acceptable management practices for harvesting and handling of pro-duce, which will ensure high quality levels. Use of clean (plastic) containers, protection of produce from heat and direct sunlight, maintenance of hygienic conditions, use of clean water for washing of produce, are among practices to be followed. 7. Inspection and Grading
Buyer and seller shall agree and specify responsibilities for inspection and grading of produce; when and where these activities will occur (e.g. upon collection); type of documents to be executed upon collection/ delivery; determination of when title and responsibility of goods pass from the seller to the buyer.
65
8. Packaging Supply and Procedures Contract should specify which party is obligated to supply packaging materials and the acceptable conditions of the package on collection. Packing procedures such as condition and quantity of pro-duce, grade and type of produce, placement and orientation within a container, should also be made clear. 9. Conditions of collection and/or delivery The contract should indicate specific collection periods of produce (time and year); conditions should be specified for events of non-collection. If buyer fails to collect at specified time, he will be obligated to purchase produce. However, seller should be obligated to hold produce for maximum period (i.e. 24 hours) beyond the collection deadline at the expense of the buyer. 10. Middlemen and Other Intermediaries Both parties agree not to engage in any transactions with any other individuals or intermediaries which involve the produce under contract. 12. Rejected Produce Point of rejection of produce should be agreed upon in the contract. If the buyer rejects the produce, conditions for the return of the produce to the seller should be specified in the contract. Any agreeable means of disposal should be specified. However, produce for which a delivery has been accepted by the buyer cannot be returned to the growers. 13. Payment Terms and Mechanism Contracting parties agree to establish payment terms, which are acceptable to buyer and seller, and to establish a mechanism of payment to sellers which will allow for safe and timely transfer of funds. 14. Penalties This should be specified in the contract .e.g. compensation should be applied to either party as a result of failure to abide with the laid down regulations of the contract. 15. Duration of Contract Duration and maturity of contract should be specified by indicating number of months from contract execution or a specific time interval. 16. Termination Clause Conditions for termination must be indicated i.e., a written notice of termination within a reasonable period, which should be equivalent to a full production and marketing cycle of the produce.
Source: Adapted from HCDA